Friday, October 2, 2009

What Can You Predict for Our Tax Rates in the Future?

What can you predict for our tax rates in the future? This is a question that I get asked quite a bit. If you remember, President Obama said in his campaign that he would raise taxes for the rich, and this was defined as those that have taxable income in excess of $250,000. These are the same folks that are already footing about 65% of the taxes already. In fact, if you taxed these "rich" people at 100%, it would not solve the trillion dollar annual deficit we are now expected to carry for the forseeable future. Next thing to consider is that the people making over $250,000 are generally the same people that are providing the jobs. When they are over taxed, they hire less and make cutbacks. You can see where I am going here.

How does this affect future tax rates? Well, if we cannot get enough taxes from the "rich", and Congress does not cut spending (they have not shown a propensity to do this), then Congress must raise taxes further. This will mean lowering the bar from the $250,000 level. My best guess is that Congress will have to raise taxes for those that make $75,000 and above to make any headway on the deficit, and fund current programs. Thus, your tax planning for the future should consider this as a highly probable event. Consult with your tax adviser to determine what this means to your individual situation.

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About Me

I am a Tax Attorney that is Certified as a Specialist by the State Bar of California. I am the founder of the Lively Law Group, a Tax Law Firm in Orange County, California. You can email me with any comments or questions at dlively@livelylawgroup.com. Any individual seeking legal advice for their own situation should retain their own legal counsel as this blog provides information that is general in nature and not specific to any person's unique situation. Circular 230 Disclaimer - Advice given in this Blog cannot be used to eliminate penalties with the IRS or any other governmental agency.